top management turnover following mergers and acquisitions

Strategic Management Journal, Vol. 9, 173-183 (1988)

TOP MANAGEMENT TURNOVER FOLLOWINGMERGERS AND ACQUISITIONSJAMES P. WALSHAmos Tuck School of Business Administration, Dartmouth College, Hanover, NewHampshire, U.S.A.

Little is known about ihe effects of a merger or an acquisition on an acquired company smanagement team. This research follows the employment status of target companies' topmanagers for 5 years from the date of acquisition. Results indicate that turnover rates inacquired top management teams are significantly higher than 'normal' turnover rates, andthat visible, very senior executives are likely to turn over sooner than their less-visiblecolleagues. Variations in top management turnover rates, however, are not accounted forby type of acquisition (i.e. related or unrelated).

Between 1965 and 1985 there were 62,246 mergerand acquisition transactions involving at least$500,000 (Ellwood, 1987). Notwithstanding theprevalence of such activity, our understanding ofthe organizational implications of mergers andacquisitions is limited (Jemison and Sitkin, 1986).The primary research focus to date has been thestudy of financial returns from both an accountingperspective (Mueller, 1977) and a finance perspec-tive (Halpern, 1983; Jensen and Ruback, 1983).The study of strategic fit has also been prominentin the literature (Rappaport,1979; Rumelt, 1974;Salter and Weinhold, 1979). We have very littlesystematic evidence, however, that would suggesthow a merger or an acquisition affects themanagement of an acquired company. The littleresearch that does exist has been criticized forits flawed methodologies (Marks, 1982). Theintent of the present research then is to begin tobuild a foundation of organizational research onmergers and acquisitions by investigating theemployment status of target companies' managersfollowing mergers and acquisitions.

The turnover of top management following a

merger or an acquisition has received attentionfrom both managers and academicians. A recentWall Street Journal article by Bennett (1986: 19)proclaimed (without evidence) that 'mergers andacquisitions are removing scores of CEOs fromtheir jobs'. The article went on to chronicle thepersonal toll of such a job loss. Potential targetmanagers reading Newsweek two months later('Confessions of a raider', 1986: 52) could nothave been heartened by the reported interviewwith Carl Icahn. When discussing his acquisitionof TWA, he said:

At TWA—to make it simple, we basicallyreplaced all the top management. That's one ofthe steps we took in the first few months. Wereally replaced the whole 42nd floor. There'snobody there on the 42nd floor at 605 ThirdAvenue who was there before. Possibly there'sone but I think he's leaving. And it had to bedone.

There is no consensus in the academic communityabout the extent or desirability of top manage-ment turnover following mergers and acquisitions.

0143-2095/88/020173-ll$05.50© 1988 by John Wiley & Sons, Ltd.

Received 17 July 1986Revised 12 December 1986

174 J. P. Walsh

One of Drucker's (1981) widely cited five rulesfor successful acquisitions is that the acquiringparent company must be able to supply topmanagement for the target company within 1year. Drucker (1981) does not argue that theparent company should dismiss the target com-pany's management; he is just warning the parentcompany to be prepared for very high turnoveramong the target company's management team.Parsons and Baumgartner (1970) and Pitts (1976),however, point out that a parent company'sintent is often to acquire and successfully integratea team of skillful managers. Indeed, the acqui-sition of the target's top management may be akey attraction of the merger. If they are correctthere may not be strong pressures on the target'smanagers to depart; or, if the pressures are there,some acquiring companies may take steps toensure the retention of the newly acquiredmanagement teams.

In fact we do not know what typical turnoverrates are among an acquired target's top manage-ment team. The only data that have been reportedare the results of a cursory study by a managementconsultant of '200 acquisitions made by a coregroup of Fortune 500 companies' (Hayes, 1979:42). Hayes (1979) reported that only 42 percentof top management stayed with the merged entityfor 5 years after the merger. After acknowledgingsome methodological problems he conjecturedthat this figure reflected just 'the tip of theiceberg' (p. 42). The intent of the current researchis to document the extent of the phenomenonand begin to understand the origins of suchturnover.

A number of theoretical perspectives informour understanding of top management turnoverfollowing a merger or an acquisition. At leastthree forces would seem to contribute to suchturnover. First, mergers and acquisitions breeduncertainty among top managers (Simmons,1984). Given that uncertainty and a lack ofvalued information has been related to turnoverintent (Walsh, Ashford and Hill, 1985), we wouldexpect to see higher than normal top managementturnover rates following a merger or acquisition.Managers who either cannot tolerate or reduceuncertainty are likely to withdraw from the firm.Second, all organizations have their own uniquecultures (Smircich, 1983). Buono, Bowditch andLewis's (1985) detailed analysis of a bank merger

revealed that the merging of two distinct culturescan produce 'feelings of hostility' and 'significantdiscomfort'. They referred to these kinds of post-merger experiences as 'culture shock'. Managerswho are either unwilling or unable to adapt to apossibly profound culture shock are likely toleave their organization. Third, mergers andacquisitions have been argued to reflect amarket for corporate control, wherein companiescompete for the right to determine the manage-ment of a target company's resources (Fama andJensen, 1983). If such competition produces clearwinners and losers, we would again expect to seehigher than normal top management turnoverrates in a target company following a merger oran acquisition. Accordingly:

//|." A target company's top management turn-over rate following a merger or acquisitionis likely to be higher than the normal ratefor an equivalent non-merged company.

Drucker's (1981) prediction of high top manage-ment turnover might not be completely at oddswith the prediction of low turnover derived fromParsons and Baumgartner (1970) and Pitts (1976).The extent of top management turnover maydepend upon the type of merger or acquisition.It is important to note that different kinds ofsynergies might be expected from any particularacquisition. Chatterjee (1986), for example, notedthree kinds of expected synergies: collusive,operational and financial; Lubatkin (1983) alsonoted three kinds of synergies: technical, pecuni-ary and diversification; while Rumelt (1974)noted two: financial and operating. The retentionof top management, therefore, might be differen-tially important across various types of acqui-sitions.

The Federal Trade Commission (FTC) hascreated a five-fold category system for classifyingmergers and acquisitions. This system is basedon the primary economic relationships establishedbetween the parent firm and the target firm. Thefive categories are thought to be mutuallyexclusive:

1. Horizontal. An acquisition is horizontal whenthe companies involved produce one or moreof the same, or closely related, products inthe same geographic market.

Top Management Turnover following Mergers 175

2. Vertical. An acquisition is vertical when thetwo companies involved had a potentialbuyer-seller relationship prior to the merger.

3. Product extension. An acquisition is consideredto be product extension in type when theacquiring and acquired companies are func-tionally related in production and/or distri-bution but sell products that do not competedirectly with one another. An example of aproduct extension merger would be a soapmanufacturer acquiring a bleach manufacturer.

4. Market extension. An acquisition is consideredto be market extension in type when theacquiring and acquired companies manufac-ture the same products, but sell them indifferent geographic markets. An example ofa market extension merger would be a fluidmilk processor in Washington acquiring a fluidmilk processor in Chicago.

5. Unrelated. This category involves the consoli-dation of two essentially unrelated firms. Anexample would be a shipbuilding companybuying an ice cream manufacturer. StatisticalReport on Mergers and Acquisitions, 1978(1980: 108-109).

Drucker's (1981) predictions of widespread topmanagement turnover may be more relevant torelated acquisitions than unrelated acquisitions.While it is difficult to predict the relative turnoverrates among all five types of acquisitions it islikely that top management retention would beless important to the acquirer in the four typesof related acquisitions. That is, the parentcompany's management is already familiar withthe target company's business, and can perhapsafford to lose members of the target's manage-ment team. Indeed, the parent company mayfeel that they can add value to the target companyby replacing the target's management team withtheir own skilled managers. In Parsons's (1960)terms, the institutional functions provided bythe target company's top management becomeredundant with the parent's top managementduties. The parent is likely to replace theinstitutionally oriented management team with a'managerial' team to act as a liaison betweentheir own institutional leadership and the technicalleadership in the acquired target. Pitts (1976),however, argued that the retention of topmanagement is crucial for a company that chooses

to diversify by acquisition, because the acquiringfirm cannot afford to lose the product and marketexperience of the target company's management.This should be especially true in unrelatedacquisitions, when the acquiring company's man-agement is unfamiliar with the target company'sbusiness. It is likely that they would take stepsto retain the target's top management in suchcases. Following Parsons (1960), the parentcompany would still need the institutional leader-ship provided by the target's top managers. Thesemanagers are familiar with their organization'senvironment and provide legitimacy in thatenvironment. Accordingly:

H2\ A target company's top managementturnover rate is likely to be higher following arelated merger or acquisition than following anunrelated merger or acquisition.

Not all management turnover following a mergermay be voluntary. Pfeffer (1981), in fact, dis-cussed the symbolic value of managerial suc-cession. He argued that the replacement ofonly a few key executives 'provides symbolicratification of the intention to change organi-zational operations, and presumably, the effec-tiveness of those operations' (Pfeffer, 1981: 39).Given that acquired companies are sometimesthought to be burdened with ineffective manage-ment teams (Manne, 1965), we would expect tosee visible, very senior executives turn over morequickly than their colleagues of somewhat lesserstatus, regardless of merger type. Accordingly:

Hy. A target company's very senior topmanagers are likely to turn over more quicklythan their colleagues of somewhat lesser rank.

In sum, these hypotheses will be tested usingdata that track the employment status of acquiredtarget companies' top management teams for 5years from the date of the acquisitions. Thisresearch provides the first systematic evidence oftop management turnover following a merger.Hypotheses regarding the relative magnitudeof these rates for merged and non-mergedcompanies, and among the different types ofacquisitions, will be examined. Predictions aboutthe relative timing of turnover among membersof the top management teams also will beinvestigated.

176 J. P. Walsh

METHODS

Sample

The research sample comprised an experimentalgroup of acquired companies and a control groupof a matched sample of companies not involvedin merger and acquisition activity during theobservation period. Each will be described inturn.

A sample of acquired companies was drawnfrom the Statistical Report on Mergers andAcquisitions, 1979 (1981). This report was pub-lished each year by the FTC, ending with thepublication of the 1979 data in 1981. The reportlists all manufacturing and mining companieswith assets of at least $10 million that wereacquired by publicly held U.S. companies. Table1 displays the number of acquisitions by type peryear sampled.

All of the companies involved in the verticaland market extension acquisitions, and a randomsample of 30 companies contacted from each ofthe remaining three categories, were asked toparticipate in this study. The years 1975 to 1979were chosen to study to avoid the unique mergerwaves of both the 1960s and early 1970s, andthe most recent merger wave of the 1980s(Scherer, 1986).

A total of 130 surveys were sent to the parentcompanies represented in this sample. 75 surveyswere returned. However, 20 of the 75 responsesindicated that they could not provide us withany information either because the data wereunavailable or because the acquired companywas subsequently divested. As such, data areavailable for 55 acquisitions that occurred betweenthe years 1975 and 1979. The overall responserate was 58 per cent, while the useful responserate was 42 percent. It should be noted, though,that five of the 55 countries sent us incompletedata. Accordingly we have data on individual

Table 1. Total number of acquisitions by FTC category

managers representing 55 acquisitions, but com-plete management team data on 50 acquisitions.The response rate at the company level of analysisthen is 39 percent. Nevertheless, these responserates were much higher than the 20 percentmailed survey response rate predicted by Gaedekeand Tootelian (1976). The final sample comprised11 horizontal mergers, 11 vertical mergers, 11product extension mergers, five market extensionmergers, and 17 unrelated mergers. The meantarget company asset size in this sample was$77.87 million with a standard deviation of$127.52 million.

A control group of 30 companies not involvedin a merger during this same time period wasdrawn from the Standard and Poor's Stock Guide.The 30 companies were distributed over the NewYork and American Stock Exchanges and wereof comparable asset size. Six had assets ofbetween $30 and $60 million; 18 had assetsbetween $60 and $90 million; and six had assetsbetween $90 and $130 million at the time ofinitial observation. The average ages of themanagers in each sample were not significantlydifferent (merged companies, A: = 50.3 years;non-merged companies, x = 49.0 years). Theyear of initial observation was controlled tobe evenly distributed over the years 1975-79inclusive.

Procedure and operationalizations

The first task was to identify each member ofthe 130 target companies' top management teamsat the time of the merger or acquisition. Thisinformation was found in each company's 10-Kor proxy statement. After identifying each execu-tive by name, age, and position, a surveywas prepared. A call to each parent companyidentified a human resources officer to whom wecould mail the survey. The survey identified each

Merger category 1975 1976 1977 1978 1979 Total

HorizontalVerticalProduct extensionMarket extensionUnrelated

4325126

12426827

26438032

221337039

5541244

692916711168

Total 59 77 100 111 97 444


member of the target's top management team atthe time of the merger. The average size of thetop management team was 8,93 managers witha standard deviation of 3,11, It asked the humanresources officer in the parent company toexamine their personnel records and report thesubsequent career histories for each executive.The parent company representative was asked toidentify whether or not each executive was stillemployed by what was the target company. Ifthe executive had left the target company therepresentative was asked to provide the date ofdeparture.

To create a comparison referent, the names ofeach executive in the 30 companies that comprisedthe control group were identified in each com-pany's 10-K or proxy statement. Their employ-ment status was then tracked in the 10-Ks orproxy statements for 5 years from the point ofinitial observation.

RESULTS

The percentage of turnover among the topmanagement teams was computed at each of 5years following the date of the merger in

the experimental group, or the time of initialobservation in the control group. Figure 1 profilesthe top management turnover rates in the twogroups,

r-tests were performed to test the hypothesisthat the top management turnover rate would behigher in the merged companies than the non-merged companies. As Table 2 indicates, thishypothesis was supported for each year. Thepercentage of the top management team thatturned over in the merged companies wassignificantly higher,than the turnover rates in thenon-merged companies at the end of each of the5 years assessed (at the 0,001 level of significance).The turnover rate in the target companies steadilyincreased from 25 percent in the first year afterthe merger, to 59 per cent (inclusive) in the fifthyear. The turnover rate in the control group ofnon-merged companies also increased steadilythrough time, but at a lower rate. The turnoverrate ranged from 2 percent to 33 percent.

It is interesting to observe that while theturnover rate in the first year was significantlydifferent between the two groups, the rate ofincrease from these different baselines is almostequivalent. Only the rate of increase betweenthe fourth and fifth year was significantly differ-

100

90

80

<f 70

I 60

^ 50

I 40

§, 30

^ 20

10 IFigure

one two three four five

Years After o Merger/Acquisition or Point of Initial Observation

KEYcomponies sampled •control group ^

1, Top management turnover following mergers and acquisitions

178 J. P. Walsh

Table 2. T-tests: top management team turnover rates in merged and non-merged companies

Variable

One-year turnover ratemerged companies

non-merged companies

Two-year turnover ratemereed comnanies

Number ofcases

50

30

50

Mean

0,25

0,02

0,37

Standarddeviation

0,28

0,06

0,29

T value

4,35

2-tailprobability

0,000


Three-year turnover ratemerged companies


Four-year turnover ratemerged companies


Five-year turnover ratemerged companies


30 0,13 0,14

50

30

50

30

50

30

0,46

0,21

0.52

0,31

0,59

0,33

0,29

0,16

0,28

0,24

0,25

0,24

4,33 0,000

4,29 0,000

3,48 0,001

4,61 0,000

ent. The turnover increased 7 percent in themerged companies and only 2 percent in the non-merged companies during that period,f(l,78)=2.33, /7<O.O5. There were no significantdifferences between the two groups of companiesin the rate of turnover increase between the firstand second, second and third, and third andfourth years,

r-tests were performed to test the secondhypothesis that the top management turnoverrate would be higher following a related acqui-sition than an unrelated acquisition. While themean 'related' turnover rate was higher than the'unrelated' mean in each year, none of thedifferences reached statistical significance. More-over, a series of ANOVAs were performed totest for mean differences in top managementturnover rates among the five types of acquisitionsat each of the 5 years of observation. All ofthe ANOVAs were non-significant. As such.

hypothesis 2 was not supported with these data.Table 3 reports the descriptive statistics for topmanagement turnover by the type of acquisition.

While top management turnover rates are notrelated to the type of merger that took place, itis possible that the rate of top managementturnover could be related to the size differencebetween the two companies. That is, a very largecompany is likely to have a supply of skilledmanagers on hand to replace the managers in asmall acquired company. In such circumstanceswe might expect to see high management turnoverrates in the acquired companies. An exploratoryanalysis will examine this possibility. To test thisalternative hypothesis the logarithms (base 10)of both the parents' and targets' assets werecomputed. Logarithms were employed becauseof the sizeable variance in the assets. Pearsonproduct-moment correlations were then com-puted between the turnover rates at each of the


Table 3. Descriptive statistics: top management turnover rates by type of merger or acquisition (mean, withstandard deviations in parentheses)

Type of merger or acquisition Years after a merger or acquisition

One

24.91(23.36)

28.36(30.80)

24.00(29.51)

37.25(30.90)

20.43(31.15)

Two

41.27(23.92)

34.91(30.30)

35.10(29.93)

43.50(41.72)

36.00(31.10)

Three

43.09(26.14)

45.18(30.47)

50.40(32.40)

46.50(39.15)

44.21(27.15)

Four

51.55(29.27)

49.91(30.14)

54.60(28.90)

52.50(33.68)

51.14(27.49)

Five

61.27(20.73)

59.73(29.24)

59.10(28.60)

64.00(24.17)

55.21(25.63)

Horizontal

Vertical

Product extension

Market extension

Unrelated

Note: All statistics are expressed as percentages.

5 years, and the differetice between the logarithmof the parents' assets and the logarithm of thetargets' assets at the time of the merger. Asignificant positive correlation between thesetwo variables would support this alternativehypothesis. As Table 3 indicates, none of thesecorrelations reached statistical significance. Infact the relationship between the asset sizedifference and top management turnover wasnegative in the first year after the merger,suggesting a slight tendency for such parentcompanies to retain top managers in the firstyear following a merger.

The sample of 761 managers was then dividedinto two groups to test the hypothesis, derivedfrom Pfeffer (1981), that more senior-levelexecutives in the target companies would turnover more quickly than their colleagues of lesserrank. The first group was comprised of 55 of the142 presidents, CEOs, or chairmen of the boardthat departed within 5 years of the acquisitiondate. The second group was comprised of 168 ofthe 619 vice-presidents, senior and executive vice-presidents, controllers, secretaries, and treasurersthat turned over within 5 years of the merger.A /-test revealed support for the third hypothesis.The group of presidents left their company in anaverage time of 17 months, while the vice-presidents left, on average, in 23 monthsr(l,221)=2.07, /7<O.O5. It is also interesting toobserve that a total of 39 percent of the

Table 4. Pearson product-moment correlationsbetween top management turnover and parent-targetasset size difference

Top management turnover (years)

One Two Three Four Five

Asset sizedifference -0.06 0.18 0.11 0.06 0.05

'presidential group' left their companies within 5years, while only 27 percent of the 'vice-presidential group' departed within 5 years.

Finally, it should be noted that in an exploratoryANOVA the interaction effect between manage-ment level and type of acquisition was non-significant for the time-to-departure variable.Moreover, this same interaction did not signifi-cantly explain top management turnover in anyof the years following a merger or acquisition.

DISCUSSION

The results of this research provide the firstsystematic evidence of the employment status ofsenior executives following a merger or anacquisition. Hypothesis 1 was supported withthese data. Top management turnover rates

180 J. P. Walsh

following a merger or acquisition are significantlyhigher than 'normal' top management turnoverrates. These rates are generally consistent withHayes's (1979) earlier results. Recall that 58percent of his sample of managers had turnedover within 5 years of a merger. The currentresults indicate that 59 percent of each company'stop management team departs within 5 years ofa merger.

The descriptive portrait alone provides a basisto discuss Drucker's (1981) 'rule' that the parentcompany must prepare to replace the acquiredcompany's top management team within the firstyear of the acquisition. These results indicatethat the parent company should be ready formanagement turnover occurring at more than 12times the normal rate, but that only one-quarterof the target's management team is likely to turnover within the year. Paine and Power (1984)questioned Drucker's (1981) assumption that thetarget's managers would naturally leave theircompany after an acquisition. They argued thatthe parent company could work to retain thetarget's management, and not just quietly acceptthe fact that they will leave. The results of thisinvestigation indicate that, independent of whatthe parent company might do, the magnitude ofthe turnover 'problem' may not be as great asDrucker (1981) or Paine and Power (1984)feared. Nevertheless, Drucker's (1981) specificconcern with turnover in the first year after anacquisition would seem to be appropriate, giventhat the rate of increase in the turnover ratebetween merged and non-merged companies isnearly equivalent beyond this first year.

It was hypothesized that the extent of topmanagement turnover would vary as a functionof the type of acquisition. Drucker's (1981)prediction of high turnover rates was hypothesizedto be most relevant to related acquisitions, whilePitts's (1976) vision of low turnover rates waspredicted to characterize unrelated acquisitions.These results indicate that there is some variancein top management turnover rates following anacquisition, but that the type of merger, or eventhe size difference between the acquiring andacquired companies, does not account for thisvariance.

The support for the third hypothesis that verysenior executives are the first to turn overfollowing an acquisition is noteworthy. Althoughit is impossible to tell from these data whetherthis turnover was voluntary or involuntary, it

does provide some evidence in support of Pfeffer's(1981) theory of the symbolic value of managerialsuccession.

FUTURE RESEARCH NEEDS

The present research has documented the extentof top management turnover following mergersand acquisitions, and examined possible originsof such turnover. Although we have positionedthis investigation in the mergers and acquisitionsliterature it is also a part of a broader stream ofresearch on executive turnover and succession.Turnover and succession studies have beenconducted in private firms (Dalton and Kesner,1985; Helmich and Brown, 1972; Johnson et al.,1985; Reinganum, 1985; Worrell et al., 1986);government (Bunce, 1980; Brunk and Minehart,1984); professional sports teams (Allen, Panionand Lotz, 1979; Brown, 1982; Pfeffer and Davis-Blake, 1986); and even churches (Smith, Carsonand Alexander, 1984). This research has generallyfocused on understanding the level of perform-ance that predicts executive turnover. Once thisturnover has occurred, it has also examined thenature of executive succession and its effects onsubsequent performance. Building upon the logicof this research tradition, we need to know muchmore about the origins and consequences of topmanagement turnover following mergers andacquisitions.

We know now that top management turnoverin merged and acquired firms is higher thannormal, but we do not know why. Future researchneeds to proceed at both the individual andorganizational levels of analyses. At the individuallevel we need to specifically examine the rolethat uncertainty, ambiguity, stress, culture shock,and the like play in an executive's decision toturn over. At the organizational level we needto examine the governance implications of suchturnover. Fama and Jensen (1983) and Manne(1965) view mergers and acquisitions as a meansof replacing inefficient managers with efficientmanagers. The target companies' performanceneeds to be assessed prior to the merger oracquisition to determine if a market for corporatecontrol, in fact, is operating. One might predicthigher turnover rates among the poorly perfor-ming target companies. A similar prediction couldbe derived from Nystrom and Starbuck's (1984)and Starbuck and Hedberg's (1977) organizational


learning perspective. They view the replacementof top management as the only certain way toensure that outdated learnings and world-viewsdo not interfere with a company's adaptation toan environmental crisis.

Neither the type of merger and acquisition northe size difference between parent and targetcompany explained the variance in the turnoverrates. The implications of parent-target organi-zational size differences needs further investi-gation for at least two reasons. First, we knowthat organizational size is associated with differentpatterns of executive succession (Dalton andKesner, 1983). Smaller firms are more likely toexperience outside succession than larger firms.Second, the present investigation suffered froma restriction of range problem. We sampled onlyamong the 444 mergers and acquisitions involving$10 million or more in the 5 years between 1975and 1979. Ellwood (1987), however, pointed outthat a total of 11,031 mergers and acquisitionsinvolving $500,000 or more took place during thesame time period. Future research should samplethese smaller mergers and acquisitions to under-stand the full impact of organizational sizedifferences on top management turnover.

The acquisition process itself can be crucial toa successful acquisition outcome (Jemison andSitkin, 1986). The acquisition negotiations them-selves may affect subsequent organization fit.Indeed, Hayes (1979) found that 'professional'negotiations were associated with top manage-ment retention. By 'professional' he meant thatthey 'took place on both social and businesslevels' (p. 42). Research that examines the natureof the acquisition negotiations (i.e. distributivevs. integrative; Walton and McKersie, 1965) andits subsequent effect on top management turnoverwould be welcomed.

The succession event itself needs additionalresearch. We know that very senior executivesdepart more quickly than their less seniorcolleagues. We do not know, however, who takestheir place. As noted earlier. Parsons (1960)might predict that more managerially orientedexecutives might replace the more institutionallyoriented executives in a related merger oracquisition.

Finally, the consequences of such top manage-ment turnover should be examined at theindividual and organizational levels of analysis.At the individual level we need to know whathappens to the careers and personal lives of those

executives who lose their jobs. The anecdotalevidence cited by Bennett (1986) would indicatethat these executives incur some cost in thistransition. At the organizational level futureresearch needs to determine if top managementturnover is associated with a subsequent improve-ment or decrement in company performance.Given that these target companies cease to existindependently upon the completion of the mergeror acquisition, however, it will be difficult toobtain the valid performance data needed toexamine these relationships.

CONCLUSION

Jemison and Sitkin (1986) recently called attentionto the paucity of empirical research on issuesof organizational fit following mergers andacquisitions. Notwithstanding our many well-reasoned prescriptions, we really know littleabout how to integrate an acquired company intoa parent company. By giving us some insight intowhat 'typical' top management turnover ratesmight be for merged (and indeed, non-merged)companies, this research begins to build theempirical foundation upon which to understandissues of organizational fit. We still do not know,however, how these rates affect subsequentorganizational performance. Nor do we fullyunderstand what is responsible for the variancein these turnover rates. Additional researchshould aim to understand both the originsand consequences of top management turnoverfollowing mergers and acquisitions.

ACKNOWLEDGEMENTS

The author would like to thank Susan Ashford,John Ellwood, and the anonymous reviewers fortheir comments on an earlier version of thispaper. Kathy Jardine and Lisa Lehman deservethanks for their help in collecting and codingthese data. The financial support of the TuckAssociates Program is gratefully acknowledged.

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top management turnover following mergers and acquisitions